SpaceX Is Paying a Reported $8 Billion for Airwaves to Fight AT&T, Verizon and T-Mobile, and Their Stocks Sank

Wall Street just marked down America's three big phone carriers over a network that does not exist yet. Late Thursday, SpaceX agreed to buy Grain Management's entire nationwide 800 MHz spectrum portfolio, and AT&T, Verizon and T-Mobile shares dropped hard.

The deal covers up to 14 megahertz of paired spectrum and still needs FCC approval. SpaceX will pay about $8 billion in cash, the Wall Street Journal reported. Neither company would comment on the price.

Why low band matters

Low-band spectrum carries signal through walls and into buildings. That is the gap SpaceX's satellite phone service could not close on its own, and most phones already support the band.

"This prime low-band spectrum addresses one of the key remaining technical gaps that will pave the way for Starlink Mobile to become a major mobile carrier in the US," SpaceX said. Elon Musk called it "the last critical piece of the spectrum puzzle needed for SpaceX to provide complete phone coverage in America."

The new airwaves stack on top of the 2 GHz satellite spectrum SpaceX picked up from EchoStar last year, and on 15,000 second-generation Starlink Mobile satellites the FCC approved earlier this week. Those next-generation satellites are targeted for 2027.

T-Mobile sold the spectrum first

There is an awkward twist. Grain bought these licenses from T-Mobile in a deal that closed in August, paying cash plus its own 600 MHz spectrum. T-Mobile is also SpaceX's US launch partner for Starlink Mobile.

That partnership already looked strained. A week ago, T-Mobile, AT&T and Verizon formed a satellite joint venture for underserved areas without Starlink, and T-Mobile removed mention of Starlink from its T-Satellite promotions.

SpaceX President Gwynne Shotwell has not hidden her ambitions. "I anticipate us to be able to acquire quite a few of their customers because I think our service will be better," she said on an August earnings call. AT&T CEO John Stankey sounded calmer in September, saying satellite operators would find places where "they clearly have a good solution" and casting them as a complement that helps carriers handle "that other 2% of the use cases."

Carriers fall, towers rise

Investors did not wait for the FCC. AT&T fell 7.3% after hours Thursday, while T-Mobile and Verizon each lost 6.6%. The slide carried into Friday premarket trading, with T-Mobile down 7.7% and Verizon and AT&T off about 6%. SpaceX shares rose about 2%.

Tower owners went the other way on bets that SpaceX will need ground infrastructure. Crown Castle rose 8.2%, American Tower 6.4% and SBA 5.6%.

Analysts think the fear is rational even if the network is years away. "Whether or not SpaceX ultimately builds a nationwide network, Musk's track record creates a credible threat that is likely to remain an overhang on incumbent valuations," said Bernstein's Laurent Yoon. Wolfe's Peter Supino said a "someday" Starlink Mobile network "is not priced into telecom stocks," and that Thursday's news raises the odds and potential speed of it happening.

Not everyone is convinced. "This adds fuel to the fire in the battle between SpaceX and the mobile operators," said Tim Farrar of TMF Associates. "But it's still a very limited amount of spectrum and to get reliable building penetration in urban areas SpaceX would have to deploy towers on the ground."

Starlink pays the bills

SpaceX can afford the fight because Starlink throws off cash. Its connectivity unit earned $1.66 billion in operating income on $4.29 billion in revenue in the second quarter, while the space and AI units lose money. The company is also looking to borrow $40 billion for Nvidia chips, so the spectrum bill is one of several large checks in flight.

For now, the carriers have lost value to a deal regulators have not approved and a phone network that SpaceX has not built.

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